Starbucks is the experience. It is not about the delivery. I like the time I placed my fresh drink on the roof of my Jeep, it fell and splattered everywhere, but by the time I walked in the door to get a new one they already had it made FREE on the house. Cool cool coffee beans. But in a snowstorm, I might rethink this!
Starbucks just announced that starting in 2015, they'll start offering limited food and beverage delivery in some markets.
It's a move that could either fail miserably or explode tremendously. But either way...it's got people talking.
Starbucks CEO Howard Schultz made the announcement on Thursday.
"Imagine the ability to create a standing order of Starbucks delivered hot or iced to your desk daily," he said during a conference call following their third quarter earnings report.
"That's our version of e-commerce...on steroids!"
It also may be a tremendously stupid idea....on steroids.
Let's examine this from the marketing perspective.
First of all - in terms of public relations, nicely done. Everyone and their (hipster) grandmother is talking about Starbucks right now.
Heck, my first reaction was excitement. Not because it meant I could get a delivery of Starbucks...but because hopefully it meant everyone would get the hell out of Starbucks so I could get a coffee in 10 minutes or less and actually find somewhere to sit.
But therein lies what may be one of the biggest problems.
Starbucks doesn't just sell coffee. They, like so many of our businesses, sell an experience.
People don't just pay $6 for a latte so they could get a caffeinated buzz. They go for the entire sensory experience. They go for the smell of the beans, the relaxing atmosphere (that some, not all, locations provide). They go to interact with people. They go for the green colors and the cool status of walking out of a Starbucks. They go because the barista knows their name and their order. They go to get away from work for a few minutes.
In the fourth quarter, Starbucks revenue rose 10 percent. They recorded a record $4.18 billion in revenue, although it did fall short of the estimate of $4.23 billion from Thomson Reuters. How do they do it? The experience.
Here's a marketing move that DID pay off for Starbucks. 15% of their business is conducted through mobile devices - the ability to pay with your phone has been HUGE.
"We have 12 million customers that are highly active on our mobile app," said Starbucks COO Troy Alstead.
Ok, so let's set aside the user experience for a second and think about the logistics.
Consider how many people are in line at any given time and how long it takes to get a drink during rush hour. Now imagine all of those drinks being created...and delivered...to offices all over the place. What happens when those ice lattes inevitably arrive melted...or the extra hot lattes arrive extra lukewarm because it took so long? The reputation management component of the potential complaints Starbucks will have to handle would be crushing.
The numbers also don't add up. With as much business as there is coming IN to Starbucks, how does it make sense to send it out? The increased costs of labor, packaging and delivery would either make $6 drinks $8 drinks out of necessity.
The way I see it - this has to be nothing more than what will ultimately turn out to be a genius marketing stunt. We'll see of two different things happen:
1) The "delivery" service will be more of a catering service where you could order platters of Starbucks food and "joe to go" for company events.
or 2) There would be a high minimum order of at least $50 along with a delivery fee.
Starbucks for years has marketed itself as being a "third place". The idea was that people could share some caffeine with friends and colleagues without being at work or home. The built the company, in some regards, on a pay-it-forward approach.
"Come into Starbucks today through Friday, buy someone else their favorite beverage and we'll give you a free tall brewed coffee."
"Buy a latte for you, we've got your friend's covered."
The difference between this approach and a buy one get one free approach from fast food companies is simple - it captivates the mind and touches on kindness. It's a very simple tweak to a marketing message that creates a feel-good situation.
You constantly hear stories about strangers buying the drink for the person in line behind them.
If the barista screws up at Starbucks, they'll often fix your drink and give you a coupon for another one next time.
In an age where we could all use a little kindness, Starbucks has tapped into this human emotion to make you spend more money with them...and make you feel good about the money you spent.
So how will this translate? I guess we'll all find out.
I want to leave you with a thought. What is your core business model? How do you market that...and what are those values that you refuse to ever change? Do you think Starbucks is biting off more than they can chew (or should I say sipping more than they can swallow) in the name of increased profits? I want to know what you think. Leave your thoughts in the comments below and share with someone else who you think could value from the reminder about their core business model.
And by the way - don't forget to follow The Silent Partner Marketing on Facebook.
Kyle Reyes is the President and Creative Director of The Silent Partner Marketing, New England's #1 Marketing Agency. We're a boutique marketing firm focused on helping businesses grow in an age of exploding technology. You can find him on Google+, Facebook and Twitter. He's the Chuck Norris of marketing. It's outrageous - we know. That's kind of the point. Outrageous marketing - extraordinary results.